President Trump continues to push for his America first policies. Those policies tend to be isolationist. So as Trump looks to increase revenue from imports, it’s a little surprising that he focused his newest tariff at our neighbor to the north; Canada. Even more surprising is that he targeted Canadian soft lumber, which makes up about ⅓ of all the lumber used in construction for homes. Now, with higher lumber tariff, lumber prices are going up 22%, it looks like the big loser here is American homebuyers.
Higher Lumber Tariff, Higher Home Prices
On Monday, the Trump administration took action against Canada for what they cited as a trade dispute. The 20% tariff will be applied retroactively according to Commerce Secretary Wilbur Ross. While the ruling is not yet final, the Commerce Department notes that Canada improperly subsidized its exports and allowed loggers to cut down trees at cheaper rates so that they could in turn sell the lumber at a cheaper price, bringing in more revenue for Canada. That tariff would result in an additional $1 billion a year when imposed on the $5 billion Canada exports to the U.S. yearly.
As a result, U.S. lumber importers are already backing off of Canadian soft lumber, driving up prices 22 percent. Those rising costs get passed on directly to the consumer, as new home costs can be expected to rise by an average of more than $1,200. The Canadian government has gone on record as disagreeing strongly with the ruling. Canadian Prime Minister Justin Trudeau is working to amend the situation and pushing for improvements in NAFTA.
The action comes as a result of a complaint filed to the Commerce Department last fall by the U.S. lumber industry. They claimed Canadian lumber was being sold at less than market value into the U.S. and that Canada heavily subsidizes its own timber industry by offering producers access to wood from government owned land at cheaper rates.
Watch the news clip from CBC News as Trump announces the new tariff on lumber from Canada:
As a result, lumber futures have reached new highs, and traders can expect U.S. timber stocks to rise up.
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Trump Changes Course, Shows Support For More Stimulus Checks
There’s some positive news for the tens of millions Americans who are still struggling to make ends meet as the coronavirus pandemic lingers for the third month.
It appears President Trump has changed his mind, and is now in favor of sending out an additional round of stimulus checks to help Americans get through the economic uncertainty created by the coronavirus pandemic.
When asked about the likelihood of additional checks, the President replied, “I think we will. I think we’re going to be helping people out. We’re gonna be getting some money for them during the artificial — cause it really is it’s an artificial closure — and now we’re gonna be able to open it up,” Trump told reporters while he was in Michigan touring a Ford factory.
“I would say there could be one more nice shot. One more nice dose,” Trump said about a potential stimulus bill as the country struggles to recover from historic job losses and businesses are faced with an uncertain future.
Trump’s comments were echoed by White House staff, including economic advisor Kevin Hassett, who said during a CNN interview that another round of checks is “pretty likely,” and says “it’s coming sooner rather than later” before adding that if there are indications the economy is recovering quickly as more states reopen, the White House may look at other relief options.
Also supporting Trump’s outlook is Treasury Secretary Steven Mnuchin, who said Thursday that there’s a “strong likelihood” the U.S. will send out another round of stimulus checks.
“I think there is a strong likelihood we will need another bill,” he said during an online event hosted by The Hill newspaper, but added that the stimulus may not be needed immediately.
“We’re going to step back for a few weeks and think very carefully if we need to spend more money and how we’re going to do that,” Mnuchin said.
The change in course comes after Republican lawmakers were originally hesitant to continue adding to the deficit while attempting to generate an economic recovery. But with job losses continuing to climb every week and estimates for the second quarter GDP to plunge as much as 40%, the Senate GOP leaders are warming to the idea of an additional stimulus package.
While Democrats have pushed a $3 trillion plan through the House, Senate Majority Leader Mitch McConnell reportedly told President Trump last week any stimulus bill should not cost more than $1 trillion.
McConnell has also openly opposed the Democratic plan to extend the $600 per week additional unemployment benefit by six months when it expires in July.
Republicans have also shown little interest in the Democrat’s proposal of nearly $1 trillion in aid for state and local governments to offset increased costs and lower revenues due to the pandemic, mainly citing that the budget issues the cities and states are facing pre-date the pandemic and relief funds shouldn’t be used to fix old problems.
The White House and Republican leaders would also like to pass liability protection for businesses that reopen, shielding owners from lawsuits should an employee claim they contracted the virus while on the job. Democrats, however, have opposed the idea.
Trump Advisor: Pelosi’s ‘Bodacious Plan’ Only Helps Her Left-Wing Interest Groups
As we mentioned Wednesday, House Speaker Nancy Pelosi unveiled the Democrats’ latest stimulus plan, and it carried a hefty $3 trillion price tag.
According to Stephen Moore, the bill seems to be nothing more than a way for Pelosi to bail out her favorite special interest groups.
Pelosi had mentioned to reporters last week that one of her motivations for being in politics is to make sure children are fed, saying “One in five mothers report that their children are not getting enough food. Three times the rate during the Great Depression.”
She added, “So in addition to putting money in people’s pockets – direct payments, unemployment insurance, some other tax credits, etc. – we really also have to put food on the table.”
Moore says Pelosi seems more interested in putting food on the tables of the wealthy than the poor she says she is motivated to protect.
Putting Food On The Wrong Table
Moore’s spending plan is a “goodie bag” that “pays off nearly every imaginable left-wing interest group,” she says. This includes teacher unions, trial lawyers, arts groups, environmental activists, postal employees and even super-rich Democratic donors.
He added, “This is a bodacious plan, preposterous in its financial irresponsibility, but the speaker and her colleagues see in this terrible disease the opportunity for a fiscal sweepstakes. She seized the moment.”
Amazingly, even a $3 trillion price tag isn’t enough for some of the more liberal Senators in Washington.
Bernie Sanders says the bill should be revised to “adequately” help Americans get through the crisis.
“[T]he Senate must improve this legislation if we are to adequately address the two most urgent needs facing working families right now: health care and economic security,” Sanders said in a statement.
Moore takes particular offense to certain items in the bill. He says none of them have anything to do with the coronavirus. He also believes that they don’t have anything to do with providing relief from the effects of the ongoing pandemic.
The list includes:
- Some $1 trillion for blue state budget repairs and pension bailouts.
- $50 million for “environmental justice grants to prevent, prepare for, and respond to coronavirus.”
- Restoration of the state and local (SALT) tax deduction for blue state millionaires and billionaires. This would be the biggest tax cut in history for the top 1 percent in income.
- $20 million for the National Endowment for the Arts and the National Endowment for the Humanities
- Extension of the $600 unemployment insurance supplement (on top of 100 percent replacement of wages through direct UI benefits. This is the scandal-ridden program that in some 30 states pays people more money to stay unemployed than to get back to work.
- $100 million for OSHA funding — we should be deregulating not increasing regulation
- Extending unemployment benefits and financial aid to illegal immigrants
- A postal service bailout.
Congressional Republicans and President Trump should “unanimously and loudly denounce this New New Deal scam,” Moore also says. He adds that these “would pad the wallets of those who are funded by programs that have zero to do with the virus itself. Coronavirus didn’t create the $100 billion Illinois and New Jersey pension deficits.”
What would help this country recover isn’t a massive payment to special interest groups. Instead, the country needs to come up with a solution for the working man, according to Moore. This includes “a payroll tax holiday that will most benefit low-income workers, deregulation, and lawsuit shields for workers and employers.”
GOP Wants Less Spending, More ‘Pro-Growth’ Measures In Stimulus Bills
With three massive stimulus packages already passed, GOP and Democratic lawmakers are starting to discuss what would be included in a potential, pro-growth fourth and even fifth round of stimulus.
There is some hesitancy on behalf of GOP lawmakers to continue spending money on relief measures. It exists with the tab already hitting $3 trillion and the federal deficit ballooning to record levels.
Many hope that as states slowly reopen, the boost in economic activity will reduce the need for additional relief.
“I just don’t think we need to act quite as urgently,” Texas Republican Senator John Cornyn, whose state started reopening this week, said. Meanwhile, other Republican Senators, including Missouri’s Josh Howley believe that we should do whatever is needed to avoid a recession. This would make any debate on spending seem trivial.
“If we enter a long-term recession or depression, the concerns we have about deficit spending now are going to look like a walk in the park,” Howley also said.
One idea that is gaining traction amongst Republicans is changing the focus of the aid packages away from simply spending money and instead look at “pro-growth” policies, although not every growth project will get the green light.
President Trump has mentioned infrastructure projects on numerous occasions. However, even those should get the axe, says Stephen Moore, a member of President Trump’s economic task force. Moore also recently disagreed with the president, saying there should be “no more spending,” even on much-needed infrastructure repairs.
On a Fox Business appearance, Moore said “There is a real movement among Republicans and conservatives around the country, especially taxpayer groups, no more spending. We’ve done almost $3 trillion of spending through the first couple of months of this, that’s enough. We don’t need more spending… government spending does not stimulate growth.”
Here are some other “pro-growth” tax measures that have been suggested to help boost our economic recovery without additional spending:
A Cut to Payroll Taxes
Moore said that Republicans are “rallying around” the idea of suspending payroll taxes as opposed to continued government spending.
“I think that’s going to be the big battle in the weeks ahead,” he also mentioned. “Do we do the payroll tax cut or do we have more government spending?” Moore then asked.
Suspending payroll tax would help incentivize employers to do more hiring by reducing their payroll costs. It will also give their employees a boost in their paychecks.
Full, Immediate Expensing
White House economic adviser Larry Kudlow recently said that one pro-growth policy he would like to see is an expansion of 100 percent immediate expensing.
“One-hundred percent immediate expensing across the board – plant, equipment, intellectual property, structures, renovations – in other words, if we had 100 percent immediate expensing we would literally pay the moving costs of American companies from China back to the U.S.,” Kudlow said.
Kudlow’s proposal would expand the type of deductible items beyond those allowed by the 2017 Tax Cuts and Jobs Act.
Deduction for Corporate Business Meals and Entertainment
President Trump has been in favor of bringing back the deduction for business meals and entertainment. It’s a way to help the restaurant industry. The deduction was eliminated as part of the Tax Cuts and Jobs Act.
Under the Tax Cuts and Jobs Act, Congress repealed the entertainment deduction. That caused confusion as to whether business meals were still deductible.
Limit Corporate Liability
Businesses start to reopen and bring back their employees. However, many owners expressed worry about what happens if their employees catch coronavirus while at work.
Providing a “blanket shield” to employers as they start to rehire workers is “essential to the recovery,” Moore told Fox Business. They want to have this in place so that they can avoid being sued every time a worker falls ill.
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